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Omdahl: Cigarette tax bypasses Legislature

By Staff | Aug 19, 2016

North Dakota voters will be casting ballots in November on an initiated measure that would add $1.73 to the present cigarette tax of 44 cents. It would be the first cigarette tax hike in 23 years.

After two bipartisan bills in the 2015 session failed, Rep. Jon Nelson (R-Rugby) predicted that refusal to act would result in an initiated measure “and I hope you like what they come up with.” It is highly unlikely that this initiated measure will be “liked” by the Legislature.

Public opinion polls consistently have indicated a strong support in the public for raising the tax but the tobacco lobby has been so influential in the Legislature that it wouldn’t accept even token raises.

In 2003, Republican Governor John Hoeven included an increase in his biennial budget for a tax increase of 35 cents. When that didn’t fly, he offered to compromise at 15 cents but the Republican Legislature refused to budge. On this issue, political kinship meant nothing.

(In a review of cigarette tax politics covering the 1980s and ’90s, the Center for Tobacco Control & Education at the University of California School of Medicine details the inner workings of the tobacco lobby in North Dakota.)

It seems that North Dakota cigarette policy can be divided into three segments.

In the early days, some folks eschewed smoking because it was a sin. Smoking was bundled with dancing, drinking and gambling as the forbidden evils of the day. However, most people continued to smoke.

Starting in the 1950s, smoking became a health issue when the medical people became alarmed at the connection between cancer and smoking. It took decades of research and thousands of deaths before public opinion could overcome the denials of a profitable tobacco industry.

North Dakota cigarette retailers have argued that a high tax would result in unfair competition across state boundaries. Meanwhile, North Dakota kept the tax at 44 cents while Minnesota raised the tax to $3; Montana to $1.70, and South Dakota to $1.53.

It doesn’t take a mathematical genius to guess which state has been selling the most cigarettes to residents of neighboring states. North Dakota retailers, especially those in the Red River valley, have been making a killing on out-of-state smokers.

Another common argument from libertarian smokers has been put this way: “This is my life. I should be able to do what I want.”

In many instances, this would be a legitimate argument but not with behavior that burdens taxpaying nonsmokers who end up with the cost of increased insurance premiums and unfunded medical expenses passed on to the public.

This leads us to the argument that raising the cigarette tax would be an unfair burden on the lower income people who can barely afford cigarettes.

It is true that smoking is more prevalent in the lower socio-economic culture but it is also true that a disproportionate share of these folks will depend on taxpayer-funded Medicaid when they run up thousands of dollars during their last extended days in hospitals.

Past polling suggests that the public will support the increase. Not only that, half of the new revenue generated has been earmarked for veterans health programs and has the support of veterans organizations across the state. The other half goes to community health programming.

So where “sin” failed to end smoking and cancer didn’t dissuade others, the out-of-pocket costs of a higher tax will convince many smokers that it is time to quit.

Research indicates that higher taxes will cut consumption, fewer people will die, and taxpayers will pay fewer hospital bills. More people will live to be happy ever after.

Omdahl is a former lieutenant governor and former political science professor at UND.

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